The XP CD is bootable, and you can run the recovery console from it. That
can fix a few things (e.g., run CKDSK), but is not a good way to save a lot
of files from a corrupted XP installation, since it does not support bulk
copies, only singel file copies.
Friendlier and more powerful alternative is to make a Bart's bootable CD, or
to burn a KNOPPIX CD from the free ISO. See links below:
http://www.nu2.nu/pebuilder/
http://www.knopper.net/knoppix/index-en.html
Also, mentioned in a previous reply, the XP CD can be used to run a "repair"
installation.
Finally, if you do not have an XP CD (some PC don't come with them), then be
aware that you can download a multi-floppy disk set from Micosoft and run
the recovery console from those. They are called setup dsks, but they can
also be used to fix some things:
http://support.microsoft.com/?kbid=310994